FTC opinion backs local health care approach

WASHINGTON COUNTY -- A U.S. Federal Trade Commission opinion says the benefits of a proposed local integrated health care plan outweigh concerns that the business could be anticompetitive.

TriState Health Partners, a physician-hospital organization based in Washington County, has proposed "clinical integration," in which physicians collaborate to treat patients and control costs.

Getting a positive opinion from the FTC's staff was an important hurdle to clear, said Allan S. Field, TriState's executive director.

"I view the advisory opinion almost like a second opinion," said Dr. Robert J. Cirincione, TriState's chief medical officer.

Access to Washington County Hospital, which owns half of TriState and is the only hospital in the county, is not tied to the purchase of physician services through TriState, the opinion says.

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As of April 30, TriState had 217 member physicians, or about 65 percent of Washington County Hospital's medical staff, Field said.

The opinion, issued April 13, says TriState's plan for comprehensive care has the potential for "significant efficiencies that may benefit consumers if it is implemented as you have described."

Jointly negotiating contracts and prices, as proposed, "appears reasonably necessary to achieve the potential efficiencies of that program," the opinion says.

One important aspect, the opinion says, is that the program is nonexclusive -- payers who don't want to contract for the clinical integration program may contract individually with TriState's member physicians.

If member physicians can't negotiate separately or if there are other signs of anticompetitiveness, "then all bets are off," said David Narrow, an attorney for the FTC's Bureau of Competition.

TriState, a for-profit organization, formed in 1994. It has components that focus on disease management, case management, pharmacy reviews, health coaching and other areas.

Washington County Hospital owns half and physicians own half.

The FTC staff's opinion says physicians in current TriState programs wrote letters expressing their concerns about the clinical integration proposal. They wondered if the hospital system and its affiliates and subsidiaries might "gain such a great market share or monopoly on the privately insured patients of Western Maryland that all other competition would be effectively eliminated."

Controlling "the majority of insurance eligible patients" could lead to a "marked decrease in competition [and] the potential manipulation of reimbursement fees," as part of a monopoly, the opinion says, quoting concerned physicians.

However, the physicians' concerns specific to the clinical integration program weren't explained and seem more connected to the hospital's current place in the market, the opinion says.

Nationwide, the FTC has responded to four requests to review clinical integration programs and given favorable opinions to three, Narrow said. Besides Washington County, the other two favorable opinions were in Denver and Rochester, N.Y.

With a favorable advisory opinion, TriState will work on other elements of setting up the program and seeking contracts, according to a PowerPoint summary it prepared.

Field said the essence of the program is "population health improvement."

Physicians and others will work collaboratively to evaluate, treat and monitor patients. They'll use electronic health records.

Field said the goal is to "move the mean" -- help the patient group as a whole -- rather than eliminate "outliers," or those in the extremes.

As an example of the potential of clinical integration, TriState cited a pilot "pay for performance" diabetes management program it oversaw for Washington County Health System employees from 2005 to 2008.

Field said TriState worked with 190 people with diabetes, helping them improve clinical results and reduce the expensive resources they used. TriState told the FTC the pilot program resulted in $160,000 in savings, which TriState and the Health System split.

Physicians pay a $2,500 fee to join TriState, the advisory opinion says. The total cost for new physicians to be part of the proposed clinical integration program was estimated to be as much as $7,600.

Physicians must meet certain standards or face removal from the program.

"I retain my independent practice," Cirincione said, "but I can be joined at the hip to my partner's quality."